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Arkansas tax cut plan advances to final vote in House

Andrew Demillo, Associated Press

Updated
3:27 pm CST, Tuesday, February 12, 2019

Arkansas Rep. Joe Jett, left, and Sen. Jonathan Dismang, right, speak to the House Revenue and Tax Committee at the state Capitol in Little Rock, Ark. on Tuesday, Feb. 12, 2019, about a proposal to cut the state's top income tax rate. less

Arkansas Rep. Joe Jett, left, and Sen. Jonathan Dismang, right, speak to the House Revenue and Tax Committee at the state Capitol in Little Rock, Ark. on Tuesday, Feb. 12, 2019, about a proposal to cut the ... more

Photo: Andrew DeMillo, AP

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Arkansas Rep. Joe Jett, left, and Sen. Jonathan Dismang, right, speak to the House Revenue and Tax Committee at the state Capitol in Little Rock, Ark. on Tuesday, Feb. 12, 2019, about a proposal to cut the state's top income tax rate. less

Arkansas Rep. Joe Jett, left, and Sen. Jonathan Dismang, right, speak to the House Revenue and Tax Committee at the state Capitol in Little Rock, Ark. on Tuesday, Feb. 12, 2019, about a proposal to cut the ... more

Photo: Andrew DeMillo, AP

Arkansas tax cut plan advances to final vote in House

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LITTLE ROCK, Ark. (AP) — A $97 million proposal to cut Arkansas' top income tax rate advanced Tuesday toward its final vote in the Legislature, but House leaders were unsure whether it has enough support to pass after facing resistance from some GOP lawmakers.

The House Revenue and Tax Committee voted 15-2 in favor of Republican Gov. Asa Hutchinson's proposal , which would cut the state's top income tax rate from 6.9 percent to 5.9 percent. The Senate approved the tax cut plan last week. It'll need at least 75 votes in the 100-member House to pass. Supporters of the bill have promoted it as a way to make Arkansas more competitive with surrounding states.

"I'm not going to sit here and promise there are going to be buses of businesses come to locate here, but I do think it's beneficial for the businesses we have currently in the state and do think it helps when people are gauging and looking around the region where to locate," Sen. Jonathan Dismang, a sponsor of the bill, told the panel.

State finance officials say approximately 579,000 taxpayers with net taxable incomes of $38,200 will receive a cut under the proposal, though critics have said the benefits are skewed heavily toward the state's highest earners. Arkansas' top income tax rate is higher than its surrounding states, while Texas has no income tax.

House Speaker Matthew Shepherd said after the vote that leaders are still counting votes and was unsure if the chamber would take up the measure this week. The House Republicans' leader said several of the chamber's 76 GOP members have said they're opposed to the legislation.

"We've still got some ground we've got to cover before we get to a point where we can pass this," Rep. Marcus Richmond, the House majority leader, told reporters after the vote.

Hutchinson and legislative leaders on Monday unveiled a $300 million highway plan that was partly aimed at swaying some GOP lawmakers who've said they want to address road needs before taking up tax cuts. The tax cut is a key part of the legislative agenda for Hutchinson, who successfully pushed for middle and low-income tax cuts in his first term.

Republican Rep. Dan Douglas said he opposes the cut, citing concerns that the highway plan doesn't go far enough and that the state isn't making up for the revenue lost through the tax cuts.

"We're spending more money all the time. Where are we saving money or where are we going to make up these deficiencies?" he said.

The bill advanced after the majority-Republican committee rejected an effort by Democrats to scale back the tax cuts for the state's highest earners. Democrats said they'll try later this week with another proposal to create a tax credit for low-income taxpayers.

"Give us a chance to slow down and say, is this the tax cut that our constituents really need and really asked for?" Rep. Charles Blake, the House minority leader, told the committee.